Energy price uncertainty, energy intensity and firm investment

Kyung Hwan Yoon; Ronald A. Ratti

doi:10.1016/j.eneco.2010.04.011

Energy price uncertainty, energy intensity and firm investment

Kyung Hwan Yoon, Ronald A. Ratti

Research output: Contribution to journal › Article › peer-review

101 Citations (Scopus)

Abstract

This paper examines the effect of energy price uncertainty on firm-level investment. An error correction model of capital stock adjustment is estimated with data on U.S. manufacturing firms. Higher energy price uncertainty is found to make firms more cautious by reducing the responsiveness of investment to sales growth. The result is robust to consideration of energy intensity by industry. The effect is greater for high growth firms. It must be emphasized that the direct effect of uncertainty is not estimated. Conditional variance of energy price is obtained from a GARCH model. Findings suggest that stability in energy prices would be conducive to greater stability in firm-level investment.

Original language	English
Pages (from-to)	67-78
Number of pages	12
Journal	Energy Economics
Volume	33
Issue number	1
DOIs	https://doi.org/10.1016/j.eneco.2010.04.011
Publication status	Published - 2011

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

Access to Document

10.1016/j.eneco.2010.04.011

Cite this

@article{e97377c0821749c4b4c25fc2c179652f,

title = "Energy price uncertainty, energy intensity and firm investment",

abstract = "This paper examines the effect of energy price uncertainty on firm-level investment. An error correction model of capital stock adjustment is estimated with data on U.S. manufacturing firms. Higher energy price uncertainty is found to make firms more cautious by reducing the responsiveness of investment to sales growth. The result is robust to consideration of energy intensity by industry. The effect is greater for high growth firms. It must be emphasized that the direct effect of uncertainty is not estimated. Conditional variance of energy price is obtained from a GARCH model. Findings suggest that stability in energy prices would be conducive to greater stability in firm-level investment.",

author = "Yoon, {Kyung Hwan} and Ratti, {Ronald A.}",

year = "2011",

doi = "10.1016/j.eneco.2010.04.011",

language = "English",

volume = "33",

pages = "67--78",

journal = "Energy Economics",

issn = "0140-9883",

publisher = "Elsevier B.V.",

number = "1",

}

TY - JOUR

T1 - Energy price uncertainty, energy intensity and firm investment

AU - Yoon, Kyung Hwan

AU - Ratti, Ronald A.

PY - 2011

Y1 - 2011

N2 - This paper examines the effect of energy price uncertainty on firm-level investment. An error correction model of capital stock adjustment is estimated with data on U.S. manufacturing firms. Higher energy price uncertainty is found to make firms more cautious by reducing the responsiveness of investment to sales growth. The result is robust to consideration of energy intensity by industry. The effect is greater for high growth firms. It must be emphasized that the direct effect of uncertainty is not estimated. Conditional variance of energy price is obtained from a GARCH model. Findings suggest that stability in energy prices would be conducive to greater stability in firm-level investment.

AB - This paper examines the effect of energy price uncertainty on firm-level investment. An error correction model of capital stock adjustment is estimated with data on U.S. manufacturing firms. Higher energy price uncertainty is found to make firms more cautious by reducing the responsiveness of investment to sales growth. The result is robust to consideration of energy intensity by industry. The effect is greater for high growth firms. It must be emphasized that the direct effect of uncertainty is not estimated. Conditional variance of energy price is obtained from a GARCH model. Findings suggest that stability in energy prices would be conducive to greater stability in firm-level investment.

UR - http://handle.uws.edu.au:8081/1959.7/536185

U2 - 10.1016/j.eneco.2010.04.011

DO - 10.1016/j.eneco.2010.04.011

M3 - Article

SN - 0140-9883

VL - 33

SP - 67

EP - 78

JO - Energy Economics

JF - Energy Economics

IS - 1

ER -

Energy price uncertainty, energy intensity and firm investment

Abstract

UN SDGs

Access to Document

Other files and links

Fingerprint

Cite this